This strange type of key is only supposed to be possessed by a Dimensional Mage. The energy within this crystal key can open a shackle in the Dimensional Hall, but the energy is only enough to open one shackle at a time.
Insert the key into the Dimensional Shackles to open it.
Only use this when you have a party of three. After finding a group, enter the Dimensional Halldungeon and insert this key into any of the three shackles. Your group should do that as well. Soon you will have to fight the boss in the middle.